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New Crypto Law JUST Passed (seriously) - YouTube
Channel: Max Maher
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- The nation's largest investment
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in infrastructure in a generation.
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- It's our job to give our people that chance.
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But there's a whole lot of confusion around this bill
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and what it actually means for both
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beginner and advanced crypto investors.
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The law that was just passed is the new
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$1 trillion infrastructure bill.
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I never understand why they give presidents
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such small desks when they sign these things.
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Either way, we have two things going for ourselves here.
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First, I have personally read
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hundreds of pages of this 2700-page bill
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and even broke the spending down into
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13 easy to read graphs.
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And second, I'm a bit of a dork when it comes to this stuff,
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and I have experience in digesting these bills
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into words that can actually be
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understood in English.
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So let's briefly cover this bill,
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how it impacts your crypto
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and a dramatic change we may see
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in the future.
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[Music]
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Taking a glance at this bill is like
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standing at the bottom of Mount Everest
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looking up thinking
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like, I'm never gonna conquer this thing.
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It's an absolute beast.
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But then you start nibbling away and it just
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becomes easier and easier.
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So at the top level,
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we can see this $1 trillion bill is
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intended to give the United States a much
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needed infrastructure facelift with
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some crypto shenanigans sprinkled on top.
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It has completely passed
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after many delays and is now set in law.
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I've broken down this bill into two parts
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New Funding and Existing Funding.
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About half the bill is simply
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continuing funding on existing projects.
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The other half is new spending and new laws.
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Now, let's quickly break this down further
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and feel free to pause this if you want to look
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at the further details.
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First, we have roads, bridges and major projects:
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$110 billion in funding.
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Railway Infrastructure: $66 billion in funding
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Public Transit: $39 billion in funding
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Safety & Research: $10.5 billion
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Airports: $25 billion
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School Bus & Ferry Emissions: $7.5 billion.
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While reading through this bill, I could not
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believe how often ferries were mentioned,
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42 times, I counted.
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I counted it's a good time to be in the
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ferry business [Laughs] I guess.
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Next up is Ports and Waterways: $17 billion
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Broadband Internet Infrastructure: $66 billion
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Power & Grid funding: $73 billion
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Water Infrastructure: $55 billion
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Resiliency: $46 billion
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Now you might be thinking
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Huh, I didn't see crypto infrastructure in there, or
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digital assets infrastructure.
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That's how it fits in.
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A small portion of the bill, that is.
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Now hidden away on Page 2433,
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are new laws for crypto regulations
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within this infrastructure bill.
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So first we're going to look at the definition
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of digital asset, which is right here.
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Digital asset means any digital representation
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of value which is recorded on a
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cryptographically secured distributed ledger
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or any similar technology.
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Now, when you scroll up here and look at "Brokers",
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because this is one of the major issues here
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and the Reporting of digital assets.
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So Brokers, the definition of Brokers is in another law.
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So this is something that happens a lot in legislative text.
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They just refer to other ones.
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So it's like impossible to read
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and you have to pull up other bills.
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So here we have the law that says what
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brokers are and what they should do.
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And one major thing that they should do is
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show the name and address of each customer.
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If we scroll down a little bit here to the definitions,
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one of them is, any other person
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who regularly acts as a middleman
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with respect to property or services.
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Now, in this instance,
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a broker is very loosely defined
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in the case of crypto.
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This could encompass stake pool operators,
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miners, and a ton of other crypto services
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that could technically be considered
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brokers.
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So if we scroll down further here,
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we can see what brokers are required to
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report to the IRS,
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we have to scroll way down here,
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and one of them is a specified security,
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in this Section (B).
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So if we go back to the bill text here,
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it says that they need to strike out
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a section of the bill text and add in
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any digital asset within
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this definition of a specified security.
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Which means any broker, which is given a large definition here,
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has to report these specified assets,
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which now encompasses
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any digital asset.
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And then this brings us to the second issue.
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Don't worry, I'm going to summarize all this.
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The second issue is the Reporting.
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So Reporting here we can see
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Any broker, which we know this is a loose definition now,
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with respect to any transfer
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during a calendar year
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shall make a return for that year.
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Now, these words in between that make no sense.
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This basically says any broker
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who processed a transfer in a calendar year
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of a digital asset which was defined earlier,
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will need to report it to the IRS,
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and they need to treat that transfer
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as they would treat cash.
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The treatment as cash for purposes of
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Section 60501(d)
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Now, if we look at the text for that,
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this basically says
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any transfer of more than
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$10,000 needs to be reported
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to the IRS.
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So to summarize this, there's a few issues
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within this bill text
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that people absolutely do not like
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and for good reason.
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First, the loose definition of "broker"
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that can encompass a miner,
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a stake pool operator, certain DeFi operators.
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Second, the KYC requirements
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for nearly anything having to
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do with crypto.
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And third, reporting requirements that are
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very similar to cash.
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Now, if you're a normal crypto buyer who pays their
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taxes, will this law impact you?
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In some situations, yes.
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In other situations, no, not really.
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So let's do a couple of examples to highlight this.
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Example Human A is Brenda.
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Brenda uses a regulated exchange Coinbase
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to buy her crypto,
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and she uses another regulated service called
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BlockFi to earn interest on her crypto.
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Brenda says that you should use the link in the description
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for BlockFi because you can get a pretty darn
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good yield on your crypto by creating an account
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and you'll earn up to $250 in
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free Bitcoin by making that account and
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transferring some funds in.
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But seriously, nothing is going to change
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for Brenda using those two services.
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And this is because Coinbase and BlockFi
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are both already regulated exchanges, and
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This document essentially tells the IRS
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what gains Brenda had this year.
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And then we have Example Human B, Klaus
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Klaus is your average German Innovation Award winner
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who also happens to be an advanced crypto user.
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He uses Binance, a regulated exchange,
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to exchange his Fiat dollars into crypto.
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But then he uses that money to buy
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altcoins on PancakeSwap,
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he yields farms and he flips NFTs.
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He kind of does it all, and this is all perfectly legal, however
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So here's what happens. Let's say Klaus,
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he initially deposited $1,000 into Binance,
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and then he flipped, traded and
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yield farmed his way up to $10,000.
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And then he went ahead and transferred that
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money back into Binance and transferred that
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into his bank account.
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They just see that $1,000
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turning into $10,000 when in fact,
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there are expenses like gas fees, transaction fees,
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and potentially both short and long term capital gains,
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all within that $10,000
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taxed at different rates.
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But Binance doesn't know that, it's a complete mess.
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What this means for Klaus is
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he now needs to keep meticulous record
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for all transactions and all fees
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if he wants to make sure that he's not
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overpaying on tax.
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In the past, many people have
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just simply skirted this requirement
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by not reporting the gains.
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But the new laws require
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a larger obligation for services
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to report on behalf of users.
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And I'm actually working on a
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free crypto tax calculator that I
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hope to give away in the next few weeks.
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So just make sure you subscribe so you can grab one of those,
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once I'm done with it.
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It's just taking much longer than expected.
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This is because of how broadly the law
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is written as to who is considered a crypto broker.
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There are two things that we should consider here.
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First is what the treasury said
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about this debacle before the bill was even passed.
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The treasury has reportedly said
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that it will continue clarifying guidance
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after the bill is passed
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to provide exemptions to firms that
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do not actually operate as brokers.
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Now, this is fairly common in legislative text.
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A law will be made,
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however, it's up to an individual agency
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to come up with specific guidelines.
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I saw this personally with
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small business stimulus programs.
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Money was allocated to help small businesses,
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but the SBA then had some discretion
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as to building out the finer rules
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of individual programs.
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And second, there is already an amendment
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in place to help tweak the law
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for those who don't trust
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the treasury will do the right thing.
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This amendment hasn't been passed yet,
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but it would exclude the following services from
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falling under the "Broker" definition.
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This broad definition that we're having an issue with.
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First, those who validate distributed ledger transactions.
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This means
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Second, those who sell
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hardware or software used to store crypto.
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And third, those who develop digital assets.
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And there you have it.
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The best darn bill-breakdown on the Internet.
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Checkmate, Bloomberg.
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[Laughs] If you appreciate my research,
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go ahead and hit that subscribe button.
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I would appreciate it so very much.
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And if you want to take this relationship to the next level,
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check out my Patreon for the best darn deal on the Internet,
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including my buy alerts, my thoughts on the market,
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a private community, some hot memes,
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and much, much more.
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So I'd like to thank you so much for watching
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and I hope you have a profitable day.
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